22 March 2011

Chairperson: Mr M Motimele (ANC)

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Meeting Summary

The Secretary for Defence presented the strategic plan and budget of the Department of Defence. The Corporate Strategic Plan and Annual Performance Plans showed the two statutory institutions of the Defence Secretariat and the South African National Defence Force separately. The Overarching Strategic Statement was the anchor document. Priority areas included border safeguarding function of the Department, while implementation of the new Defence Force Service Dispensation, different from the public service, had already begun with the establishment of the National Defence Force Service Commission. Enhancement of the SANDF Landward Defence Capabilities and addressing of piracy were further priorities. The Department paid serious attention to job creation, by filling its own posts, recruiting young South Africans to the Military Skills Development System (MSDS), calling up Defence Reserve members, increasing the Department’s works capability by training and using people with works technical skills, enhancing the peacekeeping capability and training youths for other departments, since it was able to instil discipline and a strong work ethic. The defence industry was to be restructured and supported. Other slides showing indicators and targets for job creation were presented. The outputs to meet the requirements of defence and protection of South Africans, and civil control, were outlined.The Department also aimed to meet United Nations targets and Southern African Development Community requirements. It outlined its efforts in the Justice, Crime Prevention and Security Cluster, especially the Border Management Agency. The pending legislation was described. The structure of the National Defence Security Committee and Defence Military Command Structure as well as the content of the Military Ombudsman Bill, were explained. The Department outlined how it fell in line with government objectives, and its policy proposals to support priorities. It aimed to increase research capacity, to review the defence industry and address issues in Armscor and Denel. The commitments to the Service Delivery Improvement Plans were described.

The Secretary for Defence urged that the budget must be viewed in comparison to other budget allocations. The small size of the budget posed challenges. She noted that South Africa fell short of the ideal of spending 2% of Gross Domestic Product on defence, and this compared unfavourably to other countries on the Continent and internationally. Operational expenditure for military veterans would be included in the Department budget until 2012. Although the Department had asked for amounts additional to baseline, it had received significantly less, in all years, than the requested figure. The budget allocations were fully analysed. The total budget allocation was R38.4 billion for the defence sector.

Members sought clarity on the Military Command Structure, the reasons why the Navy was still located in Simonstown, without significant presence at commercial ports, and how foreign interests in companies such as Denel would be controlled. Members interrogated how job capability and creation were to be enhanced, whether this was done in conjunction with other departments, and the distinction between the National Youth Service training and the MSDS. A DA Member cautioned that the Department should exercise due diligence to ensure that youth were not recruited from ANC Youth League branches, as had been alleged.Members asked who constituted the standby force, and if it was representative, how compliance with regulations was being enforced, what the national security points were, how the Department had addressed and improved difficulties with earlier strategic plans, and how actual performance could be measured. A Member recommended that National Treasury should be asked to indicate to the Committee exactly why it had not approved Department’s budget requests. Questions around the budget included the reasons for underfunding, whether the business case was sufficient, when the defence strategy, upon which further allocations depended, would be ready, stressed the importance of landward forces, and when vacant funded positions would be filled, and whether additional money for this was requested. Members also interrogated the audit qualifications that the Department hoped to clear by 2012, and enquired at what point irregular expenditure might amount to corruption, and what was done to address the issues. The numbers of person-days and rejuvenation targets were explained. A Member wanted specific details on acquisitions, and noted that this would be presented to the Joint Standing Committee on Defence. The Department noted that it wished to make full and further presentations on the border safeguarding strategies, the National Youth Service and reserves revitalisation strategies.

Meeting report

Department of Defence Statement and Defence Secretariat Plans Ms Nompumelelo Mpofu, Secretary for Defence, noted that in the past the Defence Secretariat (the Secretariat) had presented the Department of Defence (DOD or the Department) strategic plan and budget separately, but the two were now aligned to facilitate budgetary discussions.

She outlined the mandate, vision and mission of the Department of Defence, and its values. She also noted the regulatory requirements, noting changes to the National Treasury (NT) regulations on preparation of annual and strategic plans, and the requirements of the Money Bills Amendment Procedure and Related Matters Act. She indicated that the Corporate Strategic Plan and Annual Performance Plans (APP) had separated the two statutory institutions of the Defence Secretariat and the South African National Defence Force (SANDF). Outcomes-based planning would align departmental plans with outcomes based plans of government and its priorities. She tabled the methodological approach and outlined the strategic alignment trajectory, and evolution of the DOD plans (see attached presentation).

Ms Mpofu noted that the DOD Overarching Strategic Statement (OAS) was the anchor, and was a culmination of several budgeting and planning processes, between October 2009 and January 2011. Extensive workshops were held, including National Treasury and the Presidency, and the Department had commissioned a diagnostic study to identify problematic areas, taken recommendations on implementation and incorporated these into the planning framework.
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She indicated some priority areas, including execution of the Border Safeguarding Function, through a specific operation supported with other interventions. Issues relating to illegal migration were increasing important. Implementation of the new Defence Force Service Dispensation, different from the public service, would follow the amendment of the Defence Act (the Act) and this had already begun, with the establishment of the National Defence Force Service Commission (the NDSC). A nominations committee had been appointed and had started its process, and the Minister would shortly receive a list of defence service commissioners. The third priority was enhancement of the SANDF Landward Defence Capabilities. A further priority was situated in the maritime arena, relating to piracy on the East Coast of Africa and Somalia, and further progress reports would be given on this.

The DOD was paying serious attention to the President’s emphasis on job creation. It had identified areas where it could achieve “quick wins”, and in addition would be filling 1 401 vacant funded positions in the DOD. It would recruit of 5 700 young South Africans per year to the Military Skills Development System (MSDS) and would call up of 16 400 Defence Reserve members per year, as well as enhance the DOD Works Capability to create opportunities for people with public works technical skills. It would also enhance the SANDF Peacekeeping Capability. The National Youth Service (NYS) contribution would also assist job creation and youth development. Revitalisation of Reserves had been discussed previously, and the DOD would make a further proposal to the Committee on how it would be implemented. Restructuring and support of the defence industry would include development of a defence industry strategy and support mechanisms, including clear priorities around transformation, creation and monitoring of jobs. DOD was looking to migrate to a mechanism, as other departments had already done, to establish internal capacity to take over maintenance of its own capital assets from the Department of Public Works (DPW).

At the highest level, DOD must ensure that South Africa was defended and protected, and ensure civil control and defence. The outputs included conducting ordered defence commitments, missions, having ready defence capacity, having sound defence direction and ensuring compliance with regulatory frameworks.

Ms Mpofu listed the selected performance indicators (see slide 27). She noted that there were some fairly ambitious compliance levels for meeting United Nations (UN) targets, since this was set as a priority. Diplomatic missions would not increase, although they might change by one mission being terminated in favour of another opening. DOD participated in the Justice, Crime Prevention and Security Cluster, and the Border Management Agency would support its own operations and Cluster targets. Targets were included for airforce employment hours flown, sea hours on patrol, and MSDS members in two intakes per year, each of 5 700, and increases in the total numbers of active reserves. The Medium Term Strategic Framework (MTSF) outcomes were linked to each of these targets.

Ms Mpofu also listed the performance indicators outside the borders, to comply with Southern African Development Community (SADC) requirements. The Early Warning Centre Contribution was a useful monitoring tool, both for South Africa and other countries. DOD was active in the stand-by force. External operations were estimated at three large scale operations per year.

Ms Mpofu detailed the indicators and targets for job creation (see slide 29). The various contributory activities would include the MSDS programme, the active reserves, and the throughput for the National Youth Service, due to begin in 201/12. DOD hoped that turnover of staff would decline from 6% to 5% in the Medium Term Expenditure Framework (MTEF). The DOD World Capability function had been approved, but no target was stipulated because no new jobs would be created, as existing staff would move over. The DOD had started to engage with the defence industry, and would be able to indicate some targets after discussions, which would ensure that there was no double-counting across manufacturing and other functions.

Ms Mpofu then outlined the main areas that would be investigated when assessing performance, and indicated that cyber-security posed a new threat requiring development of new strategies. She also tabled the organisational structure, including shared staff.

Ms Mpofu gave an indication of legislation in the pipeline, which included the Military Discipline Bill, derived from the Constitutional requirement to respect the dignity of all persons, the Geneva Conventions Bill, which would enact the ratified Geneva Conventions and protocols into domestic law, the Defence and Related Acts Repeal and Amendment Bill, and the Military Ombudsman Bill. The latter would establish an office to deal with complaints by members of the SANDF, which were not dealt with by the NDSC. Regulations on the NDSC would be introduced, and appointment of the Defence Military Command Structure would address a recent Amendment Act. Extensive work had been done to finalise the regulations under the National Conventional Arms Control Committee (NCACC).

Ms Mpofu outlined how DOD fell in line with State of the Nation priorities. She then tabled inputs for the plan, which included the need to provide professional and supported DOD human resources (HR), to provide appropriate and sustained material, integrated and reliable defence information and intelligence, and finally to provide sound financial management for the DOD. Significant progress was being made here, but there was still room for improvement. DOD would also need to ensure that appropriate strategic resources were provided to renew main equipment and doctrines, ensure consensus in defence, and to undertake research and development, as well as promote an appropriate defence industry.

Specific policy proposals had been identified to support these priorities. A policy framework would form the basis of the Defence Amendment Act. The Defence Security Strategy would contribute to the National Security Strategy (under the leadership of the Department of State Security). DOD would also contribute to crime prevention strategy, led by the Justice, Crime Prevention and Security Cluster, which had prioritised rooting out of corruption in security departments.The National Youth Service Conceptual and Policy framework had been completed, and a pilot project had been held in February, training 500 youth identified by the Department of Rural Development and Land Reform (DRDLR) to participate in that Department’s extension programmes. This would develop into full rollout of the Framework in 2011/12.Research capacity would help to deal with strategic planning at a higher level and would allow DOD to take its place as the primary articulator of defence policy and research. DOD would also review issues related to the defence industry, and would re-examine the White Paper on Defence Related Industries. It would deal with strategies for the defence-related public entities, Armscor and Denel. The relationship with DPW would be informed by the changing perspectives, through the Assets and Facilities Management Policy Framework, which was nearly complete. DOD would also be focusing on human resources and skills development, to improve performance in various areas. A defence fiscal and defence capability framework was important, and would be derived from the Review of the Defence Strategy. DOD would further look at developing an Armed Forces Day policy framework, to enable the armed forces to engage with citizens and provide support to communities, as used in Commonwealth countries and USA.Long term infrastructure and other capital plans, logistics plans, the service delivery improvement plan and public private partnerships would also be taken into account and linked to the plans. Consultants would be used in listed areas (see slide 43). She stressed that DOD would, in particular, use consultants in the asset management verification programme, which constituted the one remaining audit qualification of the DOD.

The public entities reporting to the Minister were Armscor, Castle Control Board (CCB) and the Defence Force Service Commission.

Ms Mpofu noted that specific priorities in the Service Delivery Improvement Plans (SDIP) required attention to service delivery, HR management and development, business processes and tackling corruption. The commitments under the SDIP were set out in slide 46. DOD hoped to graduate to having a clean audit report from 2012/13 and hoped to have a new reporting format to help the DOD to deal with issues and reach a desired standard of reporting. It hoped to reduce turnaround time for filling of vacancies, matching the targets set in the State of the Nation Address. It would finalise the signing of all performance agreements in the Senior Management Service (SMS).

Ms Mpofu then tabled the budget, and stressed that the budget of R34.4 billion must be seen comparative to other budget allocations in government. She outlined the processes set out in the Appropriation Act. She highlighted challenges in the sector arising from inadequate budget (see slide 51), and emphasised the defence policy proposals for additional funding, in particular drawing Members’ attention to the disparity between what was requested and what had been received. She hoped that during budget debates Members could be convinced about the importance of adequate funding. She noted that DOD had asked for R5.105 billion, additional to base line, but had received R501 million - a difference of R4.86 billion - for 2011/12. In 2012/13 the request for R5.8 billion additional to baseline was not met by R5.1 billion. In 2013/14 it had requested R6 billion and received R1 billion. She said that those areas where the requests had been met indicated that National Treasury priority areas, citing border control as a prime concern of NT. She also highlighted further analyses of the budget allocations in slide 52.

Ms Mpofu clarified that for 2010/11 and 2011/12, operational expenditure for Military Veterans was still on the Defence budget, as it was not yet a separate vote. There was some discussion whether this was appropriate, and it would require urgent attention.

She tabled allocations per main programme, and allocations by economic classifications. She then focused on the administration programme, showing increases in various areas and giving some notes of clarity.

Ms Mpofu said that it was important to do a proper analysis and comparison of the defence fiscal framework, and tabled a comparative analysis showing defence allocations as a percentage of Gross Domestic Product (GDP) elsewhere in Africa, where South Africa had one of the lowest percentages, and in other international countries, showing that it was also considerable lower, at around 1.12% in 2010 and about 1.5% in 2011, compared with international benchmarks of 2%. In the sub-Saharan region, defence budgets overall had declined since 1999, but she indicated that this was no doubt affected strongly by the declining budget in South Africa. She further tabled an analysis of the DOD budget increases compared to inflation, and indicated that where the lines crossed interventions would be required. She then presented the relative divisions between personnel, operating costs and armament acquisition.

DiscussionThe Chairperson said that he had wondered where funding could be found and hoped that Members would be able to assist the Department.

Dr a Mlangeni ( ANC) asked for clarity on the total allocation for the DOD.

Ms Mpofu answered that it was R38.4 billion, for the defence sector, which included National Intelligence Agency (NIA) and State Security. The Military Veterans’ budget was R15 million, R21 million and R20 million for the three respective years of the MTEF, for operational expenditure, but there were other discussions about financing requirements of military veterans from other sources.

Ms P Daniels (ANC) noted that although South Africa could be classed as a third world country, it was nonetheless a signatory to a number of treaties and should be given the budget to maintain its international role.

Ms Daniels asked what the Military Command Structure comprised.

Ms Mpofu answered that the Defence Amendment Act promulgated in 2010 had clarified the Defence Military Command, aligned the functions of the Command Council, and set out who would constitute the Military Command Structure, to rectify previous misalignment of limited members being appointed by the President, and to now include the Chief of Human Resources and Chief of Defence Intelligence.

Ms Daniels pointed out that during oversight the Committee had established that several places had no border fences, and she enquired whose responsibility this was, and whether the budget would deal with capital and operational issues.

Mr D Maynier (DA) noted that the border safeguarding strategy was under review, and asked for more detail.

Ms Mpofu said that she would deal with this in more detail at another presentation, but borderline security was a priority, Assessments done in various departments had highlighted the need for increased focus to address threats arising from illegal immigration. The Department of Home Affairs (DHA) had tackled priorities with Zimbabwean illegal immigrants, but there was still a need to address other illegal movement. The DOD had deployed resources to the eastern border, and would also extend this to Lesotho, Namibia and Botswana. Lesotho deployment was originally only planned for 2012/13, but recent challenges around stock theft and complaints about illegal immigration created security concerns. There would also be increased deployment around Mozambique, Swaziland and the KwaZulu Natal northern borders. The South African Police Service (SAPS) was moving out of some bases, in accordance with plans, but police stations were being established about 10km from the borders so there was still a close relationship between the two departments.

Ms Daniels said that South Africa was the only navy on both east and west coasts of Southern Africa, below a certain latitude, but was still based in Simonstown and was not displaying sufficient presence or control over goods entering Durban, and she suggested that surely the Navy’s mandate should extend to protecting all commercial harbours.

Ms Mpofu confirmed that the DOD was considering activating South African Navy bases in Durban, with discussions already being held on land, and the previous focus on Simonstown would be changed.

Ms Daniels asked if enhancement of capabilities and job creation were discussed with other departments who were also training artisans.

Ms Daniels asked the DOD to explain the difference between the MSDS and Youth Services.

Mr Maynier noted the pilot programme training 500 youth in the NYS. However, he cited reports from the youth themselves claiming that they were recruited from ANC youth branches and asked what guarantee the DOD had that those recruits were not in fact recruited from the ANC Youth League. He cautioned that the DOD should not be seen to be partisan, and should avoid possible controversy.

Mr J Masango (DA) asked why the NYS was being prioritised, if it was not funded. He also wanted clarification on what it intended to be achieve, especially given the existence of the MSDS.

Mr M Nhanha (COPE) said that he would personally support conscription. He also asked that the DOD should explain what it hoped to achieve with the NYS.

Ms Mpofu suggested that it would be useful for the DOD to give a full presentation on the NYS. She noted that it was usual practice to run pilot projects in order to fine-tune policies before final rollout. The purpose of the NYS was to enable DOD, which prided itself on being a department able to train and instil discipline, to train in other departments, in order to produce public servants who fully understood their roles and responsibilities, were disciplined, and were fully committed to their work. This was particularly important since many of those being trained were extension officers or community development workers, who fulfilled a vital function (such as ensuring that people received medication), yet who often worked in far-flung areas without direct supervision. Those people identified by the DRDLR were essentially being taken into learnerships in that department, culminating in training at an agricultural college in Stellenbosch. She assured Mr Maynier that the DRDLR was recruiting people for real work, and not for party work. There was no question of partisan policies. DOD had nothing to do with where the learners were ultimately deployed, although most would probably help with food security gardens and rural development services. DOD was also speaking to the relevant departments about helping to train community health and housing development workers. She stressed that DOD could produce trainees who were educated, sharp and seriously dedicated to their jobs.

Mr Maynier, following up on his previous question, said that he was not suggesting that DOD was isolating members of the ANC Youth League for training, but he reiterated that he would like to know that DOD did due diligence in future that the recruiting departments were not simply recruiting from the ANC Youth League branches. He appreciated that it would be difficult for her to give a guarantee now.

Dr A Mlangeni raised a point of order, saying that DOD could not answer this question.

Ms Mpofu noted that the DOD itself relied on government prescripts for recruitment of staff, and had no reason to believe that any other department would deviate from the same prescripts. However, she repeated that she would like to give a full briefing on NYS initiatives later. The pilot project would help to develop the conceptual framework into a policy framework. NYS was a training support intervention to other departments. A Member had referred to “building bridges” and she confirmed that DOD did literally help communities with building infrastructure on the ground, as part of Pillar 3 of the Strategy, but was also providing support to other interventions.

Ms Daniels said that there were challenges with both Armscor and Denel. She was not suggesting that foreign participation was not needed, but cautioned against having too much control in foreign hands and asked how DOD would exercise control.

Ms Mpofu said that the Secretariat would be engaging with the Minister and Department of Public Enterprises on Denel, to try to contribute to its operational effectiveness. Essentially, Denel existed primarily to provide for the DOD, and must therefore meet its requirements, and this was not affected by any foreign ownership. She further pointed out that other industries wishing to transform had been faced with similar situations where foreign ownership was prevalent. Such foreign owners would be obliged to meet with prescripts of the Black Empowerment Charters and local legislation. She cited extensive negotiations with Hewlett Packard when the ICT Charter was being adopted, and said that the same principles would apply with the Defence Industry Support Strategy was put into operation, as foreign companies would need to meet the requirements of the BEE Charter of the Defence Industry. It could learn from good examples set in the past.

Ms Daniels noted that there needed to be clarity on who performed what functions. The Secretariat should not be a referee and a player, given the challenges in the DOD

Ms Daniels asked who constituted the standby force and whether it was representative of the country.

Major General Vusi Sindane, Acting Chief: Corporate Staff, DOD, said that the standby force dated back to a decision of the African Union in 2000, and five regions established forces, South Africa participating in the SADC brigade. Some exercises had been undertaken. The African standby force constituted Africans. The main driver in the SADC region was South Africa, and many exercises were carried out in South African territory. In the long run SADC brigade should be able to intervene in emergencies. He believed it was thoroughly representative. SANDF had a majority of black Africans, so there was no doubt about representivity.

Ms Daniels had the sense that compliance with regulations had been a problematic area, and asked how, prior to the establishment of the NDSC and Ombud, this was being dealt with.

Ms Mpofu noted that the Secretariat was established to ensure enhancement and civil control over the Defence Force. It would aim to improve compliance and reporting, and she noted that certain pockets had been identified where compliance had, in the past, been lacking, including grievances. Whilst she conceded the past problems, she said that new procedures now stipulated time frames, and this would be further supplemented with timeframes and turnaround requirements in the regulations to the Military Ombudsman Bill.The NDSC would deal with complaints, service conditions, and salaries. The combination of all three should provide sufficient mechanisms to address dissatisfaction, and improve the defence force. Management systems and processes would be measured by a Public Service Commission Audit, as well as the audit by the Auditor-General (AG). The Secretariat would not wait for the AG to identify matters, but would adopt a proactive approach itself, and would aim to resolve all issues speedily. There was considerable work being done on establishing systems business process reengineering, and sharpening the role of the Secretariat and its role with DOD.

Ms Daniels asked what the national key security points were.

Ms Mpofu said that both DOD and national security points were priorities. DOD and SAPS were holding ongoing discussions. All installations needed to be treated as national keypoints, and this would be an important consideration for the future. The Department of State Security would also give input. The National Security Strategy would then form the basis for the finalisation of defence strategy, Defence Force design and State structure.

Mr Maynier noted that on 17 March 2010 the DOD had presented a strategic plan that had been heavily criticised by National Treasury for its lack of focus on outcomes, and he asked what the Department had since done to address and rectify these criticisms

Ms Nandipha Ntsaluba, Director, Strategic Planning, DOD, noted that the current strategic plans already showed market improvements.The targets and indicators were now more refined and specific and the strategic planning process was more integrated, with clearer outcomes and outputs. After DOD had prepared the current draft, National Treasury had given a positive opinion, and the Presidency had also looked at the plan. There were quarterly deliverables, and the next plan would be improved.

Mr Maynier noted that the presentation focused on the Department of Defence, but he also wanted to hear about objectives, goals and performance of the all services in the SANDF. He enquired how, for instance, Parliament could assess whether the navy was performing properly in terms of the plans. The fact that it was spending a number of hours on patrol was meaningless unless he knew what those patrols were achieving, and whether this matched the outputs that it was supposed to show.

Ms Mpofu said that performance had in the past been dealt with in the annual reports tabled in Parliament. However, this was the first year in which the new format was being applied. It was not without its problems, since it had cut time frames and the strategic plan needed to be ready for submission between November and January. About five more levels of reporting were required.However, the major contributor would e the new format prescribed by National Treasury. This was the first year for this format. The new format had created problems, because it had cut the time frame. The strategic plan had to be ready for submission between November and January. There were about five more levels required for reporting. In this “trial year” detail might be made available in different ways, and the Secretariat was, at the very least, trying to comply with NT requirements. Some detailed information, in addition to the high level information, may need to come before the Joint Standing Committee on Defence.

Various questions were asked around budget issues.

Ms Daniels hoped that National Treasury would repay DOD timeously for any money that it spent on missions, to avoid a situation where the Department was unable to fulfil its mandate.

Mr Maynier said that the Defence Force was basically underfunded by R4.5 billion, and felt that it was important to know why National Treasury had consciously decided not to give the allocations requested. He suggested that the Committee should ask National Treasury to appear before it, and explain the position. Although one of the factors was probably prioritisation, there may well be other reasons.

Mr Nhanha agreed with Mr Maynier’s concerns. He also asked whether DOD was satisfied that it had presented a convincing business case to NT.

Ms Mpofu answered that a number of issues contributed to the current fiscal framework, and DOD aligned itself with the conservative outlook adopted, which anticipated significantly less growth in the whole country’s budget. This resulted from a number of factors, including the impact of the global recession. Although South Africa had not performed as badly as other countries, it had also not grown significantly, so there were no significant changes on the defence budget. DOD appreciated the challenges faced by NT. She noted that amounts additional to baseline would be introduced from 2012/13, when the economy was expected to turn around.

Ms Mpofu noted that DOD had presented the most convincing business case that it could, but there were limitations. There had been a thorough exercise done to detail the increases, but because there were no hard and fast rules on priorities, NT’s and DOD’s perceptions might differ. After receiving its budget, a government department was able to do some reprioritisation of allocations to different programmes, except where funds were ringfenced.NT was also influenced by its own prescripts as to what interventions DOD should be putting in place to change some of the priorities. For example, DOD had announced, in the 2010 budget speech, that it was undertaking a defence strategy or defence review, which would determine new ways of funding, and would look at the Force design and structure, which would then allow NT to look at a different fiscal “envelope” for the strategy. NT was waiting for this before making any significant changes to the way it funded DOD. National Treasury had also instructed DOD to progressively address the arrangements with the Department of Public Works, so that it moved in a similar position to the Departments of Justice and Police, who were taking over many public works functions and performing them in-house. National Treasury did not believe that DPW had capacity to adequately manage portfolios as large as those of DOD, and essentially would “penalise” DOD until it changed the situation. Exit mechanisms and rejuvenation of the SANDF were also on the table for discussion, and NT had indicated that only when it was shown positive rejuvenation and throughput of the MSDS would it be prepared to approve new plans. All of these concerns had been communicated to DOD, who was responding to all issues and priorities.

Ms Mpofu wanted to add to earlier comments on the NYS, in a budget context, noting that although the DOD had called for an initial capitalisation, NYS was essentially structured as a programme that generated its own revenue, since other government departments would be paying DOD to train youth recruits. Therefore NYS would not have a great impact on the DOD budget now, but could in the long term generate revenue.

Mr Maynier thought more clarity was needed, because additional funding was directly linked to it, on when the defence strategy would be ready, and what kind of process would follow from that.

Ms Mpofu said that around 70% of the work had been concluded. NT, public and stakeholder engagement and consultation should take place between around May and July 2011. By the end of the year, South Africa should have the final product.

Mr Maynier still thought a separate meeting was required with NT to explain why the requested funding was not approved.

Ms Mpofu said that, although she could not comment on this, she would support such information being given, as DOD was on a new trajectory, and that all should be able to debate the issues.

Ms Daniels noted that the Department needed to enhance the capabilities of the landward force, pointing out that borderline security was its responsibility, but she did not know how this could be achieved with no budget. She realised that it could take years to train and fully capacitate air and navy personnel, but landward forces were essential to border security.

Ms Mpofu responded that the DOD did recognise the importance of landward forces, but again it was linked to funding allocations. She noted that the baseline allocation for 2011/12 was about R34 billion. She explained that in May each year, DOD and NT would start the budget process, and a baseline, which would not change after confirmation, was adopted. Each department must then argue for additions to the baseline.For the MTEF, DOD was allocated an amount of R590 million in addition to baseline for 2011/12, rising to R1.043 billion in the outer years. She stressed that the R34 billion would not change so this meant that the landward force allocation remained the same as in the previous year. NT’s refusal to increase it was of concern, but it was still possible, as explained earlier, for DOD to reprioritise and allocate to different areas through virements, which were done in discussion with NT.

Mr J Masango (DA) asked about the vacant funded positions, pointing out that in the previous year, Parliament had approved transfer of funds from one programme to another to pay salaries. He wondered if there was funding to fill the vacancies.

Ms Mpofu noted that the increase in salaries referred to earlier was in relation to salary levels 1 to 12, Deputy Director downwards, and these were in fact adjustments to base salaries, in order to bring Defence Force salaries in line with Police Service salaries, following a recommendation of the NDSC. She confirmed that every funded post in the Department had a linked budget allocation, so no further funding would be requested. Only funded posts could be filled. There were attempts to do away with references to “unfunded vacant posts”, which were essentially a “wish-list” that became irrelevant if funding could not be found. She noted that DOD would not be requesting further increases to fill posts.

Mr J Masango (DA) voiced his concern that very few time frames were shown in the plan, save for achieving a clean audit from 2012 onwards, and he asked for further clarity on this.

Ms Mpofu said that when DOD appeared before the Standing Committee on Public Accounts (SCOPA) it made it clear that it was likely to take twelve to eighteen months for the DOD to sort out the qualifications around assets. The entire asset register for fixed properties was likely to be ready by 1 April 2011, but a number of interventions, with assistance from consultants, remained in relation to movable and tangible assets. Although the larger items, such as large logistical equipment, aircraft and ships, would be listed by 1 April, the exercise to list small items like ammunition, and with intellectual property, were yet to be done, an, realistically, this would take twelve to eighteen months. DOD was doing its best. There were other issues around irregular and unauthorised expenditure, but full reports would be given to SCOPA. Systems for effective management and elimination of problems had been put in place.

Ms Daniels referred to the comment about irregular expenditure and asked at what point this could amount to corruption.

Ms Mpofu said that the Secretariat aimed to limit and eliminate accounting transgressions, and she said that in each case where these had occurred, the Secretariat now knew what had happened, the person responsible, what action was taken, and how to recoup the funds. Where no action was taken anyone failing to take action could also be held liable, so that the whole environment improved. She reminded Members that irregular expenditure did not mean that the spending was incorrect, but that the proper procedures had not been followed. Wasteful expenditure would, in the DOD, lead to recouping of funds by deductions from the responsible person’s salary. If irregular expenditure was used to divert funds to other places, this was indeed corruption.

Mr Nhanha questioned what exactly “defence works capability” meant.

Mr Nhanha noted that a number of former veterans and soldiers were now running their own businesses and he wondered if DOD contributed.

Ms Mpofu confirmed that there was a tendency to cluster works capability, and it was hoped that DOD and other departments would be able to share their ability to deal with public works projects that had been shifted away from the Department of Public Works.

Dr Mary Ledwaba, Chief Director: Human Resources Development Planning, DOD, said that the main purpose of the MSDS was to rejuvenate the Defence Force, to ensure that those who were getting older were moved into other positions, and that those younger people who had moved through the MSDS would take their places so that sufficient people were ready for active deployment when necessary. Ageing personnel would be provided with skills that would enable them to maintain DOD facilities. The Works Regiment thus aimed to be a project team to maintain facilities. Those who did not want to enter this could be transferred to the Department of Police, in terms of a standing arrangement.

Mr Nhanha asked for an explanation of the projections of person-days for internal operations.

Admiral A Green, Director: Military Strategy, DOD, said that this was linked to the huge number of man days accounted for in support to the Soccer World Cup in 2010. These projections were also linked to funding for growth. The fast-tracking of SANDF’s return to the border operations meant that the projections would probably require upward revision.

Mr Maynier asked about the summaries of expenditure, asking what was being spent on acquisition, and exactly what this was being spent on. He was not prepared to approve the budget without receiving this information.

Mr Mziwonke Dlabantu, Chief Financial Officer, DOD, responded that the total amount across all six programmes was R5.973 billion, rising to R6.59 billion in the third year.

Mr Antonie Visser, Chief: Defence Material, DOD, noted that there were two components: strategic defence packages (SDP), which was almost coming to an end, and the main acquisitions. Another component of technology development through research institutions would support projects in future. He said that it was important to bear in mind the life cycle, divided into phases of technical development, concept, definition, and production. He quoted figures (but the exact years were inaudible), for SDP, navy and air force divisions (the navy would receive more), and noted the spending on the Gripen and Hawk aircraft.

Ms Mpofu added that precise details on every item, including its name, and when and why it was purchased, would be provided via the Joint Standing Committee. Full reports were available on the SDP. Meetings, including a workshop at which a full presentation would be made to the Joint Standing Committee, were being planned.

Dr Mlangeni asked for, and received confirmation from Ms Mpofu, that defence diplomatic missions were the same as military attaches.

Ms Daniels had concerns about revitalisation of reserves and asked if DOD was dealing with absorption of those who had exited the Force or gone on pension.

Ms Mpofu said that the Minister had already decided that a full presentation must be given by the Chief of Reserves to the Committee on the revitalisation strategy, how the reserves would be expanded and how they could contribute to addressing unemployment. The Defence Amendment Act also implied significant changes.

The Chairperson noted that the Committee Report should be adopted the following Thursday.

Ms N Mabedla (ANC) thanked the presenters for their informative and well-presented briefing, the clear indication of the challenges relating to the budget, and complimented the leadership.